TreeHouse Foods expands brands portfolio

August 9, 2013

OAKBROOK, Ill. — TreeHouse Foods has entered into an agreement with TorQuest Partners and other shareholders to acquire Associated Brands GP Corporation, a leading private label manufacturer of powdered drinks, specialty teas and sweeteners.

TreeHouse has agreed to pay CA$187 million (approximately U.S.$180 million) in cash for the business, subject to an adjustment for working capital.

The company expects the transaction to have a neutral effect on 2013 earnings and add approximately $0.14 to $0.16 in EPS in 2014. The transaction is expected to close in the third quarter of 2013, subject to the satisfaction of customary closing conditions, and will be financed through borrowings under TreeHouse's existing $750 million credit facility.

TreeHouse believes its acquisition of Associated Brands will significantly strengthen its retail presence in private-label dry grocery and will introduce a line of specialty tea products to complement its fast-growing single-serve coffee business.

With approximately 650 employees, Associated Brands is headquartered in Mississauga, Ontario, Canada, and operates three production facilities in Delta, British Columbia, Canada; Medina, New York; and Toronto, Ontario, Canada. Associated Brands had sales of approximately $200 million for the 12 months ended June 30. Following the acquisition, TreeHouse will have pro forma 2013 sales of approximately $2.5 billion and adjusted EBITDA of approximately $350 million.

"We are pleased to welcome Associated Brands to our TreeHouse portfolio," said Sam K. Reed, chairman, president and CEO of TreeHouse Foods. "Associated Brands has a strong North American presence in a number of dry mix categories that are complementary to TreeHouse, such as powdered drinks, oatmeal and side dishes. Through Associated Brands, we will also enter the large and growing specialty tea category. Not only is tea recognized for its nutritional and health benefits, but it will also be a wonderful complement to our rapidly growing single serve coffee platform. We see significant opportunities to expand Associated Brands' sales, while leveraging their strong customer relationships in both retail and industrial channels."

"We are looking forward to joining the TreeHouse family," said Scott Greenwood, president and CEO of Associated Brands. "Like us, TreeHouse is focused on partnering with its customers to develop superior products. We are focused on quality and operational expertise, we have an excellent R&D platform which allows us to be a fast follower in private label, and we are a best in class specialty tea producer with capabilities that are unmatched in the industry. We are confident that the combination will create distribution and innovation opportunities for both companies."

"We have enjoyed our partnership with Associated Brands since acquiring the company in 2007 and are proud of the progress it has made," said Eric Berke, chairman of Associated Brands and Managing Partner of TorQuest Partners. "Through this transaction, we are placing Associated Brands into the hands of an outstanding strategic buyer and will complete a successful investment on behalf of our investors."

Wells Fargo Securities, LLC is acting as financial adviser to TreeHouse on the transaction and Winston & Strawn LLP and Stikeman Elliot LP are serving as legal counsel to TreeHouse. BMO Capital Markets Corp. is serving as financial adviser to Associated Brands and TorQuest Partners with respect to the transaction and Torys LLP is serving as legal counsel to Associated Brands and TorQuest Partners.

Associated Brands is a leading North American manufacturer and supplier of private-label packaged food products that sells to almost all of the 50 largest North American food retailers. Associated Brands' principal focus is on manufacturing dry packaged food products such as flavored drink mixes, specialty tea, hot chocolate drinks, dessert mixes, soups, bouillon, side dishes, sweeteners and oatmeal, in addition to nutritional and weight management products. Associated Brands is majority owned by TorQuest Partners, a leading Canadian private equity firm. Founded in 2002, TorQuest Partners is a Canadian-based manager of private equity funds.

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